Result of a calculation that determines the most cost effective quantity to order (purchased items) or produce (manufactured items). The formula basically finds the point at which the combination of order cost and carrying cost is the least. The standard formula is EOQ = Square Root [2 * (Annual Usage) * (Order Cost) / (Annual Carrying Cost/unit)]. The difficult part of implementing the formula is getting accurate values for order cost and carrying cost. See my article < href="/en/inventory-managment" class="q">Optimizing EOQ for more info.